WASHINGTON, Jan 13 (Reuters) – The U.S. Department of Energy said on Friday it would lend ioneer Ltd (INR.AX) up to $700 million to build its Rhyolite Ridge lithium mining project in Nevada, a major step forward in President Joe Biden’s plan. develop a domestic supply chain of electric vehicles.
Shares of Ioneer rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, which was approved by Energy Secretary Jennifer Granholm, would be the first granted by Washington to a US mining project for lithium, a key ingredient used to make batteries for electric vehicles. This reflects the government’s growing concern that demand for the white metal could outstrip supply without more investment, setting back efforts to tackle climate change.
“The government is sending a strong signal that it’s time to let us build this mine,” James Calaway, executive chairman of ioneer, told Reuters. “We now have the capital to build a very large facility to supply lithium to the United States.”
The loan has been vetted for more than two years by the ministry’s Advanced Technology Vehicle Manufacturing (ATVM) program office and is conditional on obtaining permits and other factors. The funds would be used to build a lithium carbonate processing facility at the Rhyolite Ridge site near an existing lithium operation run by Albemarle Corp
In an interview, Jigar Shah, head of the Department of Energy’s Office of Lending Programs, called the Rhyolite Ridge project a step forward in US plans to boost lithium production. He added that he was “more than excited about the remaining pipeline” of companies that have applied for ATVM loans. The Ioneer loan will have a term of 10 years at a fixed interest rate set once the funds are dispersed.
A 2020 study had estimated the cost of the mine at around $785 million. Calaway said Australia-based ioneer should update that amount in light of recent inflation.
The mine would produce enough lithium to build 370,000 electric vehicles each year and reduce annual gasoline consumption by nearly 145 million gallons, the Department of Energy said.
Ford Motor Co (FN) and Prime Planet Energy & Solutions, a joint venture of Toyota Motor Corp (7203.T) and Panasonic Corp (6752.T), have agreed to buy lithium from the project.
“Ford and Toyota and everyone else is waiting for us to build this to supply lithium to the United States,” Calaway said.
The formal licensing process for the project began last month after the US Fish and Wildlife Service declared Tiehm buckwheat, a rare flower at the project site, an endangered species.
The company said it believes it can develop the mine while protecting the flower. The Department of Energy said the loan is conditional on the completion of the environmental review process.
“I was made aware of the buckwheat situation the first day I heard about the project,” Shah said. “It was part of our due diligence, and we wouldn’t have moved forward if we didn’t think (ioneer) had a path to build the facility.”
The ministry also noted that the ioneer changed its mine plan to avoid buckwheat and spent more than $1 million on botanists, greenhouses and related studies.
“The best chance for the plant is that we take care of it,” Calaway said.
The Center for Biological Diversity (CBD), an environmental group opposed to the project, said it believed the company would have to move its mine at least 500 meters from one of the flowers. “The mine that the Department of Energy is thinking of funding is not the mine that is going to be built,” said the CBD’s Patrick Donnelly.
Reporting by Ernest Scheyder in Houston and David Shepardson in Washington Editing by Matthew Lewis
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